Tax refund fraud increasing identity theft
A wave of refund tax fraud is fueling demand for stolen IDs. A year ago I wrote about how one set of Florida-based scamsters had tricked the Internal Revenue Service out of $12.1 million worth of refunds using the stolen names and Social Security numbers of 5,108 dead people–likely taken from the Social Security Death Index. But that, as they say, is yesterday’s news. The IRS told Congress during recent hearings that it has set up a new computer screen to flag fraud relating to the tax returns of recently deceased taxpayers and Internet genealogy sites like Rootsweb.com have limited free access to the death index. So it appears there’s some progress, at least, on that front.
Meanwhile, the fraudsters are collecting lists of living identity theft victims, either by planting employees in jobs with access to personal data or corrupting employees who already have such jobs. Former federal prosecutor Latour “L.T.” Lafferty, head of the white collar and corporate compliance practice at Florida’s Fowler White Boggs, reports that he has been hired in the past year by two local employers to investigate employee theft of information. In one case, he found, an employee had used her smart phone to take pictures of records. (The iPhone takes such good pictures that you can actually take a picture of your W-2 with it, and have the information entered into Intuit’s TurboTax app.) “The old identity theft,’’ Laferty observes, “was `may we send you a fake email and find out if you’re dumb enough to give me a Social Security number’ or going through your trash.’’ The new trend, he says, is for employees to steal names and numbers in bulk and then use TurboTax or other software to file large numbers of refund claims. (If they get in a bogus 1040 before the real, live taxpayer, or smartly pick the identity of an American who doesn’t have to file, they may be able to get thousands of dollars back.)